A limited liability company (LLC) can be very attractive for business owners for a number of reasons. LLC’s are primarily created to protect members against personal liability from any debts of the business. An LLC contains fewer compliance requirements and less paperwork compared to corporations.
Having the proper agreements in place will ensure members know and understand all necessary steps and procedures that come along with running their business. Many members are not even aware that if an LLC’s operating agreement does not spell out certain duties and responsibilities, the LLC will default to the LLC statute (Chapter 608). Recently there have been important updates to Chapter 608 that are crucial for owners and members to be aware of.
Recent revisions to the LLC statute have eliminated “managing-members”, thus eliminating their previous higher status of the LLC. This affects the power to act on behalf of the LLC in order to borrow money, execute contracts, or perform other important actions. Additional limitations were added in regards to a member or manager being indemnified. The revision now holds the member or manager personally responsible for violating any of the provisions of the LLC. There were also expansions in regards to interest transactions and appraisal rights of the LLC, and what documents will be required to be submitted to the State for public record.
There were also changes in regards to a member dissociating themselves with the LLC, an expansion in fiduciary duties of members, additional requirements for members who wish to file lawsuits on behalf of an LLC, and limitations in the event that a member or manager is sued. In addition, the number of rights and provisions members cannot waive has been expanded from 6 non-waivable provisions to 17 and limitations of real estate transactions and whom has authority to transfer real estate. Finally, there have been new time limits placed for a member-managed LLC to respond to a demand for information, additional required information when applying for reinstatement is now needed, mandatory revisions required in your operating agreement to avoid defaulting the revised LLC Act, and changes regarding the members right to vote in certain circumstances.
In order to ensure your LLC remains in compliance, it is recommended that all LLC’s have their operating agreements reviewed by an attorney. Our attorneys at Kinsey, Vincent, Pyle, P.L. have years of experience handling LLC matters and will work with you to help ensure you comply with all of the regulations of Chapter 608.
To learn more, call our office at (386) 252-1561, or click here to contact us via email.